Loss from Roth recharacterization.

[skiwarrior]

I had to recharacterize a Roth contribution because of income limits.  The withdrawal of the account balance was less than the contribution due to a market loss.  Since the withdrawal was less, TurboTax shows that I made an excess contribution and that I owe a penalty.  Do I override TurboTax to remove the penalty?     

[fanfare]

when you recharacterize, the amount you recharacterized is the amount you contributed.

End of problem.  Go through the questions again.

[skiwarrior]

That approach is inconsistent with IRS guidance for 2018 tax returns for reporting IRA recharacterizations.  If the Roth IRA recharacterization was completed in 2019 for contributions made in 2018 the IRS guidance is to report the amount transferred on an attached statement, and not on either your 2018 or 2019 tax return.   TurboTax does not request the dates of the recharacterization.  If you have a loss when you recharacterize TurboTax will generate Form 5329 and calculate the additional tax of 6% on the amount of the loss.  Deleting Form 5329 appears to be the only option.